The impact of Mutual Obligation on mature age NewStart Allowance recipients: a program evaluation
Hazel Lim
National Centre for Social and Economic Modelling (NATSEM)
Contact Email:   tetenglimyahoo.com.au

In July 2002, the coverage of the Mutual Obligation (MO) was increased to include mature age NewStart Allowance (NSA) recipients aged 35 to 49. The Welfare Reform Task Force hailed MO as the key to addressing social and economic disadvantage of job seekers. Participation in community service, training or part-time work are supposed to enable NSA recipients to exit NSA and work. In this research, the effectiveness of MO in facilitating exits from NSA is assessed by applying program evaluation methods. The longitudinal administrative dataset is used to represent the individual’s workforce participation decision-making by taking into account his/her time-use preference, participation barriers and expected labour demand.

It is found that MO is not effective in the way the previous government envisioned it to be. MO is more of a policy-tightening exercise than an active labour market policy aimed at enhancing the skills of the mature age NSA recipients. Only 2.2 percent of mature age NSA entrants manifested the behavioural change the government intended -- take up an MO activity, complete it and leave income support to work. This raises questions on the cost-effectiveness of MO as an ALMP given the expenditure on the program.

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